Spring 2021: the funds gaining and losing their Elite Ratings
Following FundCalibre’s Spring investment committee, two new funds have gained an Elite Rating and...
From spending habits to life goals, generational gaps, it seems, will not fade away. And that’s perhaps not surprising when you think that the economic and social environment into which you are born and grow can define your views on the world – shaping your outlook and your beliefs.
And, as we move through the generations ourselves, so our views and habits can evolve. From selfie-sticks to walking sticks, priorities change. But how does this impact our investment philosophy?
When it comes to investing, generally speaking, the longer you have to invest, the more risk you can afford to take. And, as you get closer and closer to retirement and move from accumulating your wealth to using it to live on, so the amount of risk should reduce.
As we approach the end of ISA season, we take a look at some investment ideas for each generation.
These two generations encompass anyone under the age of 24 – from new born babies to those in higher education or just starting out in their careers. At this age, you can afford to take a lot of risk for potentially greater rewards.
Investing in a current global trend, this fund ‘eats its own cooking’ using an artificial intelligence (AI) system to help find companies whose business models are aligned to benefit from this growing theme. The fund invests in more than just technology stalwarts; around half of the portfolio can be found in the healthcare and consumer-related sectors.
GQG, which stands for ‘global quality growth’, is one of the newest and fastest growing asset management businesses, having only launched in 2016. This fund is a concentrated portfolio of high quality companies with durable earnings. The emphasis is on future quality, rather than companies which have simply done well historically.
Ranging from their mid-twenties to the big 4-0, this generation is likely to have varying priorities. Some will still be early in their careers and single with fewer responsibilities. Others may be saving for a house deposit while others may have children of their own. Either way, when it comes to long-term goals like retirement, they still have a twenty to forty years to invest.
Managed by the successful team behind Liontrust Special Situations fund, Liontrust UK Smaller Companies fund employs the same investment strategy but with a small-cap bias. The distinctive investment process focuses on firms with strong positions within their industries. The fund has a great track record and is particularly strong in down markets.
This trust invests predominantly in companies listed both domestically in China and on the Hong Kong Stock Exchange. The manager is able to make use of Fidelity’s investment licences in China, which are among the largest of any international investor, offering investors direct exposure to the China growth story.
This generation is likely to be enjoying peak earnings, with a bit more spare cash to enjoy. While retirement is probably a subject they are now planning for more meaningfully, there are still one to two decades left on their time horizon – plenty of time to maximise contributions and still take some risk.
The manager of this fund combs the breadth of the Asia Pacific market in search of large companies with reliable dividends that can deliver both income and growth for investors. He aims to capitalise on the opportunities of today, as well as the potential of tomorrow.
This is a high conviction fund focuses on finding reforming large and medium-sized European businesses, which can create wealth and returns for shareholders. It has a clear and common-sense strategy and the two fund managers have been working on the strategy together since 2001.
Here what co-manager Chris Garsten had to say about investing in Europe in this video interview:
Some of this generation may be lucky enough to have taken early retirement or are retired already. Others will still be working. But as people live longer in retirement, making the pot of money work hard for you, even when you have stopped contributing, will be a priority.
M&G is perhaps the biggest name in the UK bond space, and M&G Optimal Income is its flagship offering. This ‘go-anywhere’ fund has a flexible mandate, which enables the manager to shift the interest rate exposure and to invest across the fixed income spectrum. The fund can, and often does, invest in some equities, and also derivatives.
This is a deep value-driven fund that invests in companies valued at less than their ‘true’ worth and waits for a correction. It has little correlation with other income funds, tending to avoid the big income producers in favour of more niche names, where both capital as well as income can grow significantly.